Singapore healthcare firms bombarded with expansion-driven costs

All eyes are on cost management.

It’s expand or lose out for Singapore’s healthcare firms, and while a number of healthcare firms in the city-state are doing just that, they have to first struggle with expansion costs.

For instance, in a report by OCBC, IHH Healthcare Berhad’s core operational profit decline of 11% to RM177m presented a case of profit erosion from inevitably higher financing and depreciation expenses due to the acquisition of Global Hospitals and new hospitals.

Similarly, Q&M Dental Group also found that its revenue growth was not enough to compensate for the drag by finance costs in 4Q, which had increased due to the acquisitions. As a result, 4Q15 PATMI declined 40% to S$2.1m, OCBC said.

Nonetheless, OCBC said there should be meaningful upside from these expansion plans especially after the ramp-up phase, if successful cost management is in place as well.

Meanwhile, Raffles Medical Group have had a fairly smooth sailing expansion path, as results were within expectations with an 11.6% YoY increase in its 4Q15 PATMI to S$21.3m.